NUCLEAR REGULATORY COMMISSION

[NUREG-1600]

SUMMARY: The Nuclear Regulatory Commission (NRC) is
amending its "General Statement of Policy and Procedure for NRC Enforcement
Actions" to conform to modifications to the Deliberate Misconduct
Rule. These modifications extend that Rule to applicants for NRC licenses,
applicants for, and holders of, certificates of compliance, early site
permits, standard design certifications, or combined licenses issued under
part 52, applicants for or holders of certificates of registration, quality
assurance approvals, and the employees, contractors, subcontractors, and
consultants of those persons. By a separate action published in this issue
of the Federal Register, the Commission has issued a final rule amending
10 CFR parts 30, 32, 40, 50, 52, 60, 61, 70, 71, 72, 110, and 150.

SUPPLEMENTARY INFORMATION: The Commission's "General
Statement of Policy and Procedure for NRC Enforcement Actions" (Enforcement
Policy or Policy) was first issued on September 4, 1980. Since that time,
the Enforcement Policy has been revised on a number of occasions. On June
30, 1995 (60 FR 34381), the Enforcement Policy was revised in its entirety
and was also published as NUREG-1600. The Policy primarily addresses violations
by licensees and certain non-licensed persons, as discussed further in
footnote 3 to Section I, Introduction and Purpose, and in Section X: Enforcement
Action Against Non-licensees.

The Deliberate Misconduct Rule was adopted in September 1991 and applies
to any licensee or any employee of a licensee; and any contractor (including
a supplier or consultant), subcontractor, or any employee of a contractor
or subcontractor, of any licensee. The Deliberate Misconduct Rule placed
licensed and unlicensed persons on notice that they may be subject to
enforcement action for deliberate misconduct that causes or would have
caused, if not detected, a licensee to be in violation of any of the Commission's
requirements, or for deliberately providing to the NRC, a licensee, or
contractor, information that is incomplete or inaccurate in some respect
material to the NRC.

The final rulemaking expands the Deliberate Misconduct Rule, where it
appears in 10 CFR parts 30, 40, 50, 60, 61, 70, 72, and 110, clarifies
the scope of part 32 and adds the Rule to parts 52 and 71. This expansion
arises out of a realization that the current Rule does not apply to applicants
for NRC licenses, applicants for, or holders of, certificates of compliance,
early site permits, standard design certifications, or combined licenses
issued under part 52, applicants for or holders of certificates of registration,
quality assurance program approvals and the employees, contractors, subcontractors,
and consultants of those persons. The Commission believes that it is equally
important for these categories of persons to be subject to enforcement
action for deliberate wrongdoing, such as the submission of inaccurate
or incomplete information.

The Commission is making this change to the General Statement of Policy
and Procedure for NRC Enforcement Actions to make it consistent with the
regulations. The changes include: (1) Expansion of footnote 3 in Section
I, which discusses the scope of the Policy; (2) deletion of the reference
to vendors in Section VI.C.5, to avoid possible confusion as a result
of a partial listing of those to whom the Rule and Policy apply; and (3)
restating the opening sentence in Section VI.C.5 and in Section X: Enforcement
Actions Against Non-licensees, to set out the full scope of the Rule and
its application through the Enforcement Policy.

The Commission has held that the term "contractor" includes
a vendor or supplier that manufactures and offers for sale materials intended
for use by NRC licensees and certified to meet the requirements of 10
CFR part 50, Appendix B. In the Matter of: Five Star Products, Inc. and
Construction Products Research, Inc., 38 NRC 169, CLI-93-23 (October 21,
1993). In light of that holding, the remaining references to vendors throughout
the Enforcement Policy are also being modified to refer to contractors
as the inclusive term. These changes are being made in Sections V, VI.B.1,
VI.C, VI.D, VIII, X, Table 1A, and Supplements I.C. and VII.C.

Paperwork Reduction Act

This policy statement does not contain a new or amended information collection
requirement subject to the Paperwork Reduction Act of 1995 (44 U.S.C.
3501 et seq.). Existing requirements were approved by the Office of Management
and Budget, approval number 3150-0136. The approved information collection
requirements contained in this policy statement appear in Section VII.C.

Public Protection Notification

The NRC may not conduct or sponsor, and a person is not required to respond
to, a collection of information unless it displays a currently valid OMB
control number.

Small Business Regulatory Enforcement Fairness Act

In accordance with the Small Business Regulatory Enforcement Fairness
Act of 1996, the NRC has determined that this action is not "a major"
rule and has verified this determination with the Office of Information
and Regulatory Affairs, Office of Management and Budget.

Accordingly, Sections I, V, VI B., C., and D., VIII, X, and Supplements
I and VII of the NRC Enforcement Policy are amended to read as follows:

General Statement of Policy and Procedure for NRC Enforcement
Actions

I. Introduction and Purpose

The purpose of the NRC enforcement program is to support the NRC's
overall safety mission in protecting the public and the environment.
Consistent with that purpose, enforcement action should be used:

As a deterrent to emphasize the importance of compliance with requirements,
and

To encourage prompt identification and prompt, comprehensive correction
of violations.

Consistent with the purpose of this program, prompt and vigorous enforcement
action will be taken when dealing with licensees, contractors1,
and their employees, who do not achieve the necessary meticulous attention
to detail and the high standard of compliance which the NRC expects2.
Each enforcement action is dependent on the circumstances of the case
and requires the exercise of discretion after consideration of these policies
and procedures. In no case, however, will licensees who cannot achieve
and maintain adequate levels of protection be permitted to conduct licensed
activities.

Whenever the NRC has learned of the existence of a potential violation
for which escalated enforcement action appears to be warranted, or recurring
nonconformance on the part of a contractor, the NRC may provide an opportunity
for a predecisional enforcement conference with the licensee, contractor,
or other person before taking enforcement action. The purpose of the conference
is to obtain information that will assist the NRC in determining the appropriate
enforcement action, such as: (1) A common understanding of facts, root
causes and missed opportunities associated with the apparent violations,
(2) a common understanding of corrective actions taken or planned, and
(3) a common understanding of the significance of issues and the need
for lasting comprehensive corrective action.

During the predecisional enforcement conference, the licensee, contractor,
or other persons will be given an opportunity to provide information consistent
with the purpose of the conference, including an explanation to the NRC
of the immediate corrective actions (if any) that were taken following
identification of the potential violation or nonconformance and the long-term
comprehensive actions that were taken or will be taken to prevent recurrence.
Licensees, contractors, or other persons will be told when a meeting is
a predecisional enforcement conference.

The NRC imposes different levels of penalties for different severity
level violations and different classes of licensees, contractors, and
other persons. Tables 1A and 1B show the base civil penalties for various
reactor, fuel cycle, and materials programs. (Civil penalties issued to
individuals are determined on a case-by-case basis.) The structure of
these tables generally takes into account the gravity of the violation
as a primary consideration and the ability to pay as a secondary consideration.
Generally, operations involving greater nuclear material inventories and
greater potential consequences to the public and licensee employees receive
higher civil penalties. Regarding the secondary factor of ability of various
classes of licensees to pay the civil penalties, it is not the NRC's intention
that the economic impact of a civil penalty be so severe that it puts
a licensee out of business (orders, rather than civil penalties, are used
when the intent is to suspend or terminate licensed activities) or adversely
affects a licensee's ability to safely conduct licensed activities. The
deterrent effect of civil penalties is best served when the amounts of
the penalties take into account a licensee's ability to pay. In determining
the amount of civil penalties for licensees for whom the tables do not
reflect the ability to pay or the gravity of the violation, the NRC will
consider as necessary an increase or decrease on a case-by-case basis.
Normally, if a licensee can demonstrate financial hardship, the NRC will
consider payments over time, including interest, rather than reducing
the amount of the civil penalty. However, where a licensee claims financial
hardship, the licensee will normally be required to address why it has
sufficient resources to safely conduct licensed activities and pay license
and inspection fees.

5. Orders to non-licensees, including contractors and subcontractors,
holders of NRC approvals, e.g., certificates of compliance, early site
permits, standard design certificates, or applicants for any of them,
and to employees of any of the foregoing, are used when the NRC has identified
deliberate misconduct that may cause a licensee to be in violation of
an NRC requirement or where incomplete or inaccurate information is deliberately
submitted or where the NRC loses its reasonable assurance that the licensee
will meet NRC requirements with that person involved in licensed activities.

In addition to the formal enforcement actions, Notices of Violation,
civil penalties, and orders, the NRC also uses administrative actions,
such as Notices of Deviation, Notices of Nonconformance, Confirmatory
Action Letters, Letters of Reprimand, and Demands for Information to supplement
its enforcement program. The NRC expects licensees and contractors to
adhere to any obligations and commitments resulting from these actions
and will not hesitate to issue appropriate orders to ensure that these
obligations and commitments are met.

1. Notices of Deviation are written notices describing a licensee's failure
to satisfy a commitment where the commitment involved has not been made
a legally binding requirement. A Notice of Deviation requests a licensee
to provide a written explanation or statement describing corrective steps
taken (or planned), the results achieved, and the date when corrective
action will be completed.

2. Notices of Nonconformance are written notices describing contractors'
failures to meet commitments which have not been made legally binding
requirements by NRC. An example is a commitment made in a procurement
contract with a licensee as required by 10 CFR part 50, Appendix B. Notices
of Nonconformances request non-licensees to provide written explanations
or statements describing corrective steps (taken or planned), the results
achieved, the dates when corrective actions will be completed, and measures
taken to preclude recurrence.

3. Confirmatory Action Letters are letters confirming a licensee's or
contractor's agreement to take certain actions to remove significant concerns
about health and safety, safeguards, or the environment.

Listed below are examples of situations which could result in enforcement
actions involving individuals, licensed or unlicensed. If the actions
described in these examples are taken by a licensed operator or taken
deliberately by an unlicensed individual, enforcement action may be taken
directly against the individual. However, violations involving willful
conduct not amounting to deliberate action by an unlicensed individual
in these situations may result in enforcement action against a licensee
that may impact an individual. The situations include, but are not limited
to, violations that involve:

Willfully causing a licensee to be in violation of NRC requirements.

Willfully taking action that would have caused a licensee to be in
violation of NRC requirements but the action did not do so because
it was detected and corrective action was taken.

Recognizing a violation of procedural requirements and willfully
not taking corrective action.

Willfully defeating alarms which have safety significance.

Unauthorized abandoning of reactor controls.

Dereliction of duty.

Falsifying records required by NRC regulations or by the facility
license.

Willfully providing, or causing a licensee to provide, an NRC inspector
or investigator with inaccurate or incomplete information on a matter
material to the NRC.

Willfully withholding safety significant information rather than
making such information known to appropriate supervisory or technical
personnel in the licensee's organization.

Submitting false information and as a result gaining unescorted access
to a nuclear power plant.

Willfully providing false data to a licensee by a contractor or other
person who provides test or other services, when the data affects
the licensee's compliance with 10 CFR Part 50, Appendix B, or other
regulatory requirement.

Willfully providing false certification that components meet the
requirements of their intended use, such as ASME Code.

Willfully supplying, by contractors of equipment for transportation
of radioactive material, casks that do not comply with their certificates
of compliance.

The Commission's enforcement policy is also applicable to non-licensees,
including contractors and subcontractors, holders of NRC approvals, e.g.,
certificates of compliance, early site permits, standard design certificates,
quality assurance program approvals, or applicants for any of them, and
to employees of any of the foregoing, who knowingly provide components,
equipment, or other goods or services that relate to a licensee's activities
subject to NRC regulation. The prohibitions and sanctions for any of these
persons who engage in deliberate misconduct or knowing submission of incomplete
or inaccurate information are provided in the rule on deliberate misconduct,
e.g., 10 CFR 30.10 and 50.5.

Contractors who supply products or services provided for use in nuclear
activities are subject to certain requirements designed to ensure that
the products or services supplied that could affect safety are of high
quality. Through procurement contracts with licensees, suppliers may be
required to have quality assurance programs that meet applicable requirements,
e.g., 10 CFR part 50, Appendix B, and 10 CFR part 71, subpart H. Contractors
supplying certain products or services to licensees are subject to the
requirements of 10 CFR part 21 regarding reporting of defects in basic
components.

When inspections determine that violations of NRC requirements have occurred,
or that contractors have failed to fulfill contractual commitments (e.g.,
10 CFR part 50, Appendix B) that could adversely affect the quality of
a safety significant product or service, enforcement action will be taken.
Notices of Violation and civil penalties will be used, as appropriate,
for licensee failures to ensure that their contractors have programs that
meet applicable requirements. Notices of Violation will be issued for
contractors who violate 10 CFR part 21. Civil penalties will be imposed
against individual directors or responsible officers of a contractor organization
who knowingly and consciously fail to provide the notice required by 10
CFR 21.21(b)(1). Notices of Nonconformance will be used for contractors
who fail to meet commitments related to NRC activities.

Dated at Rockville, Maryland, this 6th day of January, 1998.
For The Nuclear Regulatory Commission.
John C. Hoyle,
Secretary of the Commission.

The term "contractor" as used in this policy
includes vendors who supply products or services to be used in an NRC-licensed
facility or activity.

This policy primarily addresses the activities of
NRC licensees and applicants for NRC licenses. Therefore, the term "licensee"
is used throughout the policy. However, in those cases where the NRC
determines that it is appropriate to take enforcement action against
a non-licensee or individual, the guidance in this policy will be used,
as applicable. These non-licensees include contractors and subcontractors,
holders of, or applicants for, NRC approvals, e.g., certificates of
compliance, early site permits, or standard design certificates and
the employees of these non-licensees. Specific guidance regarding enforcement
action against individuals and non-licensees is addressed in Sections
VIII and X, respectively.